Weekly Feed Market Commentary

Published 25 February 15

Feed Grains

It’s been a bearish week for the grains market. May-15 feed wheat contracts fell over the week closing at £120.50/t on Tuesday 24 February, down £4.50/t on the previous Tuesday. May-15 Chicago maize closed at $151.77/t (24 Feb), down $4.82/t on a week ago. Nearby Paris maize contracts have followed the general trend closing €3.75/t down on the previous week at €149.25/t on 24 February. In the absence of major fundamental news, the market appears to lack direction; trading being influenced mostly by rumours.

Updated forecasts for the new season were announced at the USDA's outlook conference this week, but failed to have a significant impact on grain markets. Estimates suggest a smaller US area planted to wheat for harvest 2015 than in the USDA's latest baseline projections. However, yields are currently forecast to be better than in 2014 with drought conditions less harsh compared with this time last year. While almost 2% down on last year, the forecast maize area was larger than some expected.

It has been another strong week for EU export licenses as EU wheat and barley export commitments continued to move strongly ahead of last year’s pace. As at 18 February, a further 900Kt of export licenses were issued for wheat and 380Kt issued for barley, bringing total wheat commitments 650Kt ahead of last year and total barley commitments almost 1Mt ahead on the year. This reinstates the point that the EU is a key source for wheat this season – but only at the right price.

Protein Meal

Prices have increased over the week for both soyameal and rapemeal. The UK rapemeal price (34%, Ex-mill Erith, January delivery) was £190/t on Friday (20 Feb), up £3/t from the week before. Hi-Pro soyameal (Ex-Store East Coast delivery) was £320/t (20 Feb), a £5/t increase on the previous Friday.

The deadlock between buyers and sellers remains in the oilseeds market. The next big event that everyone’s waiting for is confirmation of the South American soyabean crop; harvesting in Brazil will get into full swing in March. With the expectation of a record crop and lower prices, buyers are biding their time.

However, in Brazil, truckers have been protesting against high fuel taxation. Blockades have been formed on highways across the country, including Mato Grosso, one of the key soyabean producing states. Protests have continued for seven days and many areas are experiencing fuel shortages just as farmers prepare for a record soyabean harvest. Talks have been arranged but there is a real possibility that exports will be held up, which may add short term support to prices.

On that note however, the relative lack of activity is causing the market to get overexcited over the slightest amount of news. Last week, the USDA’s announcement of a lower US soyabean planted area in 2015, at their annual outlook conference, saw prices move up on Thursday, even though only a 0.2% decline in area was forecast and planting hasn’t even started. Since then, prices have returned to previous levels.